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FHA Loans for Condominium Units
Condo Loans Insured through FHA Section 234(C)

FHA Condominium Loans are specifically geared toward those

who purchase housing units in a condominium building.

Condominium ownership, in which separate owners of

individual units jointly own the development's common areas

and facilities, is for some a very popular alternative to

home ownership. Insurance for this type of housing is

provided through FHA Section 234(C). This FHA insurance is

very important for low and moderate-income renters who wish

to avoid the risk of being displaced when their apartments

are converted into condominiums.

HOW IT WORKS
Of the many types of mortgage insurance offered by FHA.com,

FHA Condominium Loans are designed to encourage lenders to

extend affordable mortgage credit to those who have

non-conventional forms of ownership. The Section 234(C)

program insures a loan for 30 years to purchase a unit in a

condominium building. The building must contain at least

four dwelling units and can be comprised of detached and

semidetached units, row houses, walkups, or an elevator

structure.

Through this and other types of mortgage insurance

programs, FHA.com helps low and moderate-income families

purchase homes with FHA loans by keeping the initial costs

down. By serving as an umbrella under which lenders have

the confidence to extend loans to those who may not meet

conventional loan requirements, FHA loan insurance allows

individuals to qualify who may have been previously denied

for a home loan by conventional underwriting guidelines.

AVAILABLE ASSISTANCE

Many of the features of Section 234(C) mortgage insurance

are similar to those of FHA Section 203(B) for one to

four-family homes. Down payment requirements are low

because these FHA loans allow borrowers to finance up to 97

percent of their home loan and some of the closing costs

can also be financed, further reducing up front costs. On a

Section 234(C) loan, FHA sets limits on the size of the

loan which vary with location and the number of units being

purchased.

RESTRICTIONS
If the apartment is in a building that was converted from

rental housing, insurance may not be provided under Section

234(C) unless:
the conversion occurred more than one year prior to the

application for insurance.
the potential buyer or co-buyer was a tenant of that

rental housing.
the conversion of the property is sponsored by a tenant's

organization that represents a majority of the households

in the project.
Eighty percent of FHA mortgages in the project must be made

to owner-occupants.

ELIGIBILITY

Any creditworthy persons who meet FHA underwriting criteria

and are intending to occupy the condominium unit as their

principal residence are eligible to apply.